STATE BANK OF VIETNAM MINISTRY OF EDUCATION AND TRAINING BANKING ACADEMY
----------------------
NGUYEN MINH PHUONG
COMPLETING INTERNAL AUDIT AT VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
DOCTORAL THESIS IN ECONOMICS
HANOI - 2016
STATE BANK OF VIETNAM MINISTRY OF EDUCATION AND TRAINING BANKING ACADEMY
----------------------
NGUYEN MINH PHUONG
COMPLETING INTERNAL AUDIT AT VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
Major: Finance - Banking Code: 62.34.02.01
DOCTORAL THESIS IN ECONOMICS
Scientific supervisor : 1. Dr. NGUYEN THI THANH HUONG
2. PROFESSOR, DR. NGUYEN VAN TIEN
HANOI - 2016
COMMITMENT
I hereby declare that this is a scientific work researched and carried out by myself. The information and data used in the thesis are completely honest and have clear sources. The thesis does not overlap with any published research work.
Hanoi, August 23, 2016
PhD student
Nguyen Minh Phuong
INDEX
INTRODUCTION 1
CHAPTER 1: THEORETICAL BASIS OF INTERNAL AUDIT AT COMMERCIAL BANKS 13
1.1. GENERAL ISSUES ON INTERNAL AUDIT 13
1.1.1. Concepts of internal audit 13
1.1.2. Code of ethics and conduct of internal audit 17
1.1.3. Internal Auditing Standards 18
1.2. INTERNAL AUDIT AT COMMERCIAL BANKS 20
1.2.1. Organizational structure 21
1.2.2. Internal audit content at Commercial Bank 25
1.2.3. Internal audit approach 29
1.2.4. Internal audit process 32
1.3. FACTORS AFFECTING INTERNAL AUDIT OF COMMERCIAL BANKS 42
1.3.1. Objective factors 42
1.3.2. Subjective factors of the bank 43
1.4. COMPLETING INTERNAL AUDIT AT COMMERCIAL BANKS 46
1.4.1. Concept of completing Internal Audit in banking 46
1.4.2. The need to improve internal audit 48
1.5. EXPERIENCE IN INTERNAL AUDIT AT CREDIT INSTITUTIONS AND LESSONS LEARNED 49
1.5.1. International experience in internal audit at credit institutions 49
1.5.2. Domestic experience in internal audit at credit institutions 60
1.5.3. Lessons learned 62
CHAPTER 1 CONCLUSION 65
CHAPTER 2: CURRENT STATE OF INTERNAL AUDIT AT THE BANK FOR AGRICULTURE AND RURAL DEVELOPMENT OF VIETNAM 66
2.1. OVERVIEW OF VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT 66
2.1.1. History of formation and development of Vietnam Bank for Agriculture and Rural Development 66
2.1.2. Characteristics of Agribank's business activities 68
2.1.3. Organizational model and operating network of Agribank 69
2.1.4. Overview of Agribank's business performance 71
2.2. CURRENT STATE OF INTERNAL AUDIT AT AGRIBANK 80
2.2.1. Legal basis of internal audit activities 80
2.2.2. Current status of internal audit organization structure 82
2.2.3. Current status of internal audit content 86
2.2.4. Current status of approaches in internal audit 88
2.2.5. Current status of internal audit process 90
2.3. FACTORS AFFECTING THE STATUS OF INTERNAL AUDIT AT AGRIBANK 112
2.3.1. Survey process 112
2.3.2. Reliability assessment and scale evaluation 114
2.3.3. Analysis of the level of influence of factors on internal audit at Agribank 117
2.4. ASSESSMENT OF THE CURRENT STATE OF INTERNAL AUDIT AT AGRIBANK 120
2.4.1. Results achieved in internal audit at Agribank 120
2.4.2. Limitations 122
2.4.3. Causes of limitations 129
CHAPTER 2 CONCLUSION 135
CHAPTER 3: SOLUTIONS TO IMPROVE INTERNAL AUDIT AT THE BANK FOR AGRICULTURE AND RURAL DEVELOPMENT OF VIETNAM 136
3.1. ORIENTATION OF AGRIBANK'S ACTIVITIES IN THE COMING TIME...136 3.1.1. Orientation and goals of common activities 136
3.1.2. Orientation to improve internal audit and control work 138
3.1.3. Principles for perfecting the organization and operation of internal audit at Agribank...138
3.1.4. Requirements for internal audit work at Agribank 139
3.2. SOLUTIONS TO IMPROVE INTERNAL AUDIT AT AGRIBANK 140
3.2.1. Completing audit content 141
3.2.2. Perfecting the audit approach 142
3.2.3. Completing the internal audit process 146
3.2.4. Enhance the responsibility of the Board of Members and the Executive Board in establishing and operating an effective and efficient internal control system 148
3.2.5. Strengthening coordination of audited units 152
3.2.6. Human resource improvement 155
3.2.7. Perfecting the organizational structure of the apparatus 158
3.3. RECOMMENDATIONS TO IMPROVE INTERNAL AUDIT AT AGRIBANK 160
3.3.1. Recommendations to the State Bank 160
3.3.2. Recommendations to the Government and state management agencies 162
CHAPTER 3 CONCLUSION 163
CONCLUSION 164
LIST OF WORDS
Acronym
Original meaning | |
KSNB | Internal control |
KTKSNB | Internal control test |
KTNB | Internal Audit |
KTV | Auditor |
KTNV | Internal Auditor |
State Bank of Vietnam | State Bank of Vietnam |
Agribank | Vietnam Bank for Agriculture and Rural Development |
Commercial Bank | Commercial Bank |
NH | Bank |
TCTD | Credit institutions |
TSC | Head office |
QLRR | Risk Management |
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LIST OF TABLES, FIGURES, BOXES, DIAGRAMS
Table 1.1: Internal audit approaches (%) 30
Table 1.2: Comparison between traditional approach and risk-based audit approach 31
Table 2.1: Some financial indicators of Agribank from 2012-2015 71
Table 2.2: Types of internal audits of banks 86
Table 2.3: Internally audited operations at Bank 87
Table 2.4: Internal audit approach at Bank 89
Table 2.5: Current status of internal audit planning at Bank 91
Table 2.6: Information sources for the Internal Audit Department to conduct risk assessment 92
Table 2.7: Internal audit risk measurement methods 92
Table 2.8: Current status of using quantitative assessment tools at Bank 93
Table 2.9: Evaluation of internal audit implementation at Bank 97
Table 2.10: Assessment of audit reporting at Bank 99
Table 2.11: Key recommendations 100
Table 2.12: Time of issuance of audit report 111
Table 2.13: Current status of the audit department monitoring its recommendations 111
Table 2.14: Evaluation of implementation of internal audit recommendations 112
Table 2.15: Statistical results of reliability for each factor 115
Table 2.16: Summary of the influence level of two groups of KTNB factors 118
Table 2.17: Summary of the level of influence of subjective factors on internal audit118 Table 2.18: Summary of the level of influence of subjective factors on internal audit119 Table 2.19: Assessment of the current state of internal audit of Agribank compared to best practices 128
Table 3.1: Relationship between internal audit and units belonging to defense layers 1 and 2 154
Chart 1.1: KTNB's future focus 53
Figure 1.2: Six methods of measuring the value of KTNB 55
Chart 1.3: Important skills for KTV NB 56